Will Microsoft Release An Apple Watch Competitor In 2015?

Microsoft Corporation MSFT is rumored to be developing a smartwatch. The device is expected to have more than two days of battery life and could be unveiled before the end of the year.

Not much else is known about Microsoft's plans, but a previous report claimed that the company was drawing on its optical engineering expertise from its Kinect division. This tidbit was especially interesting because Microsoft had already developed a wrist-worn 3D hand tracker for gestural interactions:

The two-year-old concept may not be ready for launch, but it would make for an interesting smartwatch. Analysts expect a much simpler idea, however.

"While it's a me-too product at this point, [Satya] Nadella and Microsoft need to penetrate the wearables category given their consumer push," FBR Capital Markets analyst Daniel Ives told Benzinga. "While it's an uphill battle, Nadella recognizes Microsoft needs to go full blast on every consumer and enterprise category to expand its brand awareness for the 'new, more innovative Microsoft.'"

Related Link: Apple Inc. Watch Shows 'Innovation Is Back'

Carving Out A Niche

Tech industry expert and analyst Jeff Kagan doesn't expect Microsoft's smartwatch to be as successful as the Apple Watch.

"It'll carve out a niche, a piece of the pie," Kagan told Benzinga. "When you talk about smartphones -- Google with Android, Samsung with Galaxy and Apple with iPhone -- they're really working hard and splitting up the market. When it comes to tablets, Apple has the vast majority of market share. I [think] watches [will be] like the tablet sector. I see it being not as successful as smartphones, not as successful as tablets, but it will work with the tablets or smartphones, so it'll be another sub sector."

While Kagan may have more faith in Apple Watch than Microsoft's unannounced product, he doesn't expect the former to be a "big deal" for a few years.

"Some people don't want it," Kagan added. "They have everything they need on a phone or tablet and they don't need another device."

Won't Move The Needle

One analyst (who asked not to be quoted by name) showed no interest in the watch rumor because it "won't move the needle for Microsoft."

"Xbox is really their [consumer success story]," the analyst told Benzinga. "That's their strategy around the connected living room. That's the one area where they do have some market share. How can they make Xbox One more relevant to a larger audience?"

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.